TaxTMI 
TaxTMI 
2011 (1) TMI 461
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.... from 9-7-2004 to 31-3-2006. For receiving such services the assessee was paying remuneration in the form of commission to the agents outside India. The commission agents/service providers were non-residents or outside India or did not have offices in India. Therefore a show-cause notice was issued calling upon the assessee to discharge the service tax liability. An amount of Rs. 1,19,71,705 was claimed as total value of the taxable service. In addition education cess and interest was also claimed and they were also called upon to show cause as to why penalty should not be imposed. The assessee contended that the service providers are providing service abroad. Hence the service providers did not attract levy of service tax and they have no intention to evade service tax inasmuch as they were under the bona fide belief that they were not liable to pay service tax for the aforesaid reasons. They denied the liability to pay tax, interest and penalty. 3. The assessing authority on a consideration of the aforesaid representation held that it is not in dispute that the assessee is a receiver of taxable service from abroad. The assessee had agreements with overseas commission agents wh....
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....contra, the learned counsel appearing for the assessee relying on the aforesaid judgment of the Bombay High Court contended that the liability to pay service tax on the recipient of the service was imposed for the first time by amending the Act and introducing section 66A. Till such time there was no liability on the recipient of tax as held by the Bombay High Court which has been confirmed by the Apex Court. Section 68(2) did not empower the Central Government by specifying the person who is liable to pay tax and even they have specified in the Notification that it is one without jurisdiction as held by the Bombay High Court. He therefore submits that the order passed by the Tribunal based on the aforesaid judgment cannot be found fault with. 6. Therefore the answer to this question revolves round the interpretation to be placed on section 66A as well as section 68(2) of the Act. Section 68 of the Act reads as under :- "68. Collection and recovery of service tax:- (1) Every stock-broker, the telegraph authority or the Insurer who is providing taxable services to any person shall collect the service tax at the rate specified in section 66. (2) Th....
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....urposes of the said sub-section, namely:- (A) the services,- (i) in relation to a telephone connection or pager or a communication through telegraph or telex or a facsimile communication or a leased circuit; (ii) in relation to general insurance business; (iii) in relation to insurance auxiliary service by an insurance agent; and (iv) in relation to transport of goods by road in a goods carriage, where the consignor or consignee or goods is, - (a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948); (b) any company established by or under the Companies Act, 1956 (1 of 1956); (c) any corporation established by or under any law; (d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; (e) any co-operative society established by or under any law; (f) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; or (g) any body corpora....
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.... usual place of residence, in a country other than India, and such service provider does not have any office in India." In none of these Notifications the Central Government had specified the person who is liable to pay service tax in the case of a service provider who is residing outside India who has no fixed establishment in India or who has no permanent address in India. However, the Parliament has amended the Act by introducing section 66A by the Finance Act, 2006 which came into effect on 18-4-2006 which reads as under:- "66A. Charge of service tax on services received from outside India.-(1) Where any service specified in clause (105) of section 65 is,- (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place or residence, in a country other than India, and (b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be the taxab....